When the Canadian business owner or financial manager looks to the leasing of an asset, as opposed to a purchase it’s a great time to invest in some knowledge around which companies to approach for equipment finance needs.
But can you be expected to be a ‘ DIY ‘ expert in this broad area of Canadian business financing. What we are saying is that it will pay you handsomely to either invest some time in understanding some key fundamentals of equipment finance, or, alternatively work with an expert who can assist you.
Why invest some time in this type of business acquisition? Simply because the Canadian lease landscape has evolved significantly over the last couple years. A combination of the economy in Canada, the lease industry players, new accounting rules and a myriad of product offerings can make it seem daunting.
By the way we’re quite sure any business owner can work with lease companies and enter somewhat quickly into a lease for an asset, but is it the right lease and what are the financial implications and benefits or lack of benefits around that transaction. That’s the $ 50,000 dollar question!
Because almost 80% of all business utilize leasing Canada – that’s why it sometimes is both easy and mis- understood. Many business owners simply don’t either under the lease product/service offering, or, alternatively fail to recognize the benefits. Yes, its only one method of financing an asset (you can consider a term loan)… but when a lessor / lease company’s recognize you know what you’re talking about you have simply increased your chances for success.
Lease and equipment finance doesn’t bring cash flow and working capital into your company, but boy does it reduce the amount of funds that go out of your firm! The ownership of the equipment from by the lessor, for the term of the lease allows you to structure payments, write off payments as an operating expense, and more importantly keep you ‘ nimble’ when it comes to assets and technologies that you finance over short or long terms. (Typical lease terms in Canada range from 3-5 years).
Business owners might want to do the math but we’re quite sure that if you work the numbers it makes sense to enter into a couple of short term equipment finance transaction rather than purchase/buy outright the same assets over a number of years.
If you do invest time in understanding some lease finance basics, or alternatively work with an expert you’ll see that you can actually determine when it makes sense to either upgrade, return, or renew any lease finance transaction.
Can our DIY lease financing business owner affect the final credit and structure approval of his or her transaction? The reality is that tougher credit standards are in place since the 2008-2009 global recessions. Therefore the industry focuses on creditworthy lessees- but the good news is that some basic structuring around any transaction can still make your deal happen. Issues such as term, pricing and down payment can be negotiated to the point where it makes sense for the lessor and your firm.
Working an experienced Canadian business lease financing advisor can ensure you get the best pricing, structure, and achieve the benefits you’re looking for.
So, everyone’s talking about ‘ DIY ‘ these days. Why not invest some time in developing a solid relationship with a lease advisor? Success in asset leasing allows you to grow your company with the assets you require… today!